WORKING WITH INSURANCE COMPANIES

Working with Insurance Companies

Overview

Pediatrician leans over paper with pen in hand while writing a letter of medical necessity
Insurance providers often require prescriptions, preauthorizations, or letters of medical necessity to cover the costs of some medications, equipment, services, nutritional or other supplies, and procedures that children with chronic and complex conditions need. The medical item requirements, processes, time frames, and options for appeal vary by insurer.
Who responds to these requirements and communicates/coordinates with the insurers, families, and service providers should be considered, along with the expectations for each step’s timeframe and what to do if a request is denied. Designating a care coordinator or another staff member to manage these requests and processes is recommended. Keeping records of what does and does not work, who at an insurer is or is not helpful, important phone numbers and URLs, copies of prescriptions, forms, and letters of medical necessity, and appeals can improve processing times and success rates. Periodically updating forms and personal insurer contacts’ information keeps this often changing information current.

Writing Prescriptions

When writing required prescriptions, include all relevant diagnoses and ICD-10 codes. Be as specific as possible about details, such as the quantity or length of time needed. Consult the insurer’s website for the submission processes.
Some prescriptions – e.g., for wheelchairs, orthotics, prosthetics, hearing aids – are best detailed by an expert therapist who will help the patient with fit, training, and ongoing assessment. These prescriptions can be written by the therapist and co-signed by the clinician.
RX for Diapers (Word Document 19 KB) is a modifiable sample in Microsoft Word of a prescription that uses many of the details required by insurance companies.

Preauthorization Process

When a relatively uncommon or particularly expensive procedure, evaluation, service, medication, DME, etc. is needed, explore whether preauthorization is needed from the health insurer. The insurer’s website should provide guidance regarding which items need preauthorization and the process to request it. Generally, insurers require demographic information for the patient, relevant diagnoses with ICD 10 (the more, the better), and CPT or HCPCS codes for the specific service, procedure, medication, or supply requested. CPT codes for laboratory tests may be found on the lab’s website.
Preauthorization can be approved, denied, or further information may be requested. If denied, the clinician or staff, with the family’s involvement, may request that the insurer review the decision, and they can offer a peer-to-peer (physician-to-physician or doc-to-doc) conversation and a letter of medical necessity.

Peer-to-Peer Calls

Insurers usually set an appointment for a peer-to-peer call with a window of a few hours. The requesting physician should be familiar with the case and any research to support the request. The insurance company physician is usually a primary care provider and may not familiar with the medication/procedure etc. requested; however, they are generally open and try to be helpful. A concise explanation of reasons for the request, including previous interventions, outcomes, condition impacts, and expected benefits, is helpful.

Writing Letters of Medical Necessity

The effectiveness of a funding advocacy/medical necessity letter is greatly enhanced if the clinician understands the legal issues involved, includes pertinent components in the letter, and lays the groundwork for an appeals process if needed.
Before writing the letter, confirm the following:
  • The child is covered by the insurance.
  • The diagnosis is covered (e.g., developmental delay may not be covered).
  • The item requested is not an exclusion of the policy (e.g., physical therapy).

Components of a Medical Necessity Letter

  • Identifying information: Child's name, date of birth, insured's name, policy number, group number, Medicaid number, physician name, and date letter was written
  • Your name and credentials
  • Nature of relationship (primary care, specialist) and its duration, and the date you last evaluated the patient
  • Relevant diagnoses: Think carefully about what diagnoses to include because some diagnoses may be an exclusion. One insurer refused to cover PediaSure for a child with autism because it was not a covered diagnosis but, on appeal, they covered the PediaSure for chronic constipation, a covered diagnosis.
  • CPT or HCPCS (for Medicaid or Medicare) code(s) for the medical, surgical, and diagnostic services, medications, and supplies
  • Pertinent medical history: For example, for a wheelchair approval for a child with cerebral palsy, mention the severe motor impairment and its impact on the child and family.
  • Pertinent medical, developmental, or evaluative information: For a child with poorly controlled asthma for whom you are requesting a nebulizer, all current treatments, reasons that metered-dose inhalers are not sufficient, and number of ER visits and hospital admissions in the past year would be relevant.
  • Why the requested evaluation/treatment/equipment is medically necessary. This is critical, but unfortunately, the definition of medically necessary varies from insurer to insurer. Medicaid's definition of being medically necessary is:
    • Reasonably calculated to prevent, diagnose, or cure conditions in the patient that endangers life, causes suffering or pain, physical deformity or malfunctions, or threatens to cause a handicap; and
    • There is no equally effective treatment available for the recipient that is more conservative or less costly.
  • Summary statement that emphasizes the logical conclusion (e.g., a nebulizer is medically necessary for this child with asthma. Since the patient’s policy covers the diagnosis, and durable medical equipment is a covered benefit, it would be appropriate to approve the request.)
  • Signature and contact information, inviting the reviewer to contact you with questions
Keep a copy of the letter in the patient's file. You/the family will need it if you/the family need to file an appeal.
Note that the company providing the service/supply you are requesting, such as a wheelchair, expensive medication, or genetic test, may provide sample letters of medical necessity.

Special Circumstances

Equipment requests:
  • Indicate which therapist evaluated the child, and refer to (attach if possible) the therapist's report or letter.
  • State whether the disability is permanent or temporary and how the child's condition is expected to evolve.
  • Give a rationale for replacing existing equipment (e.g., the child has outgrown their current chair, and it was determined by the child's physical therapist that the current chair could not be adequately "grown" to meet the child's needs).
  • Emphasize how the requested item will prevent the onset of secondary disability or increases the individual's functional abilities, thus improving the child's overall condition.
  • Avoid referring to caregiver convenience and/or doing "nice" things for the child.
For children with disabilities, focus on how the service/evaluation/equipment will:
  • Prevent the onset of an illness, untoward condition, injury, and/or secondary disability
  • Reduce, correct, or ameliorate the physical, mental, developmental, or behavioral effects of an illness, condition, injury, or disability
  • Assist the individual in achieving or maintaining sufficient functional capacity to perform age-appropriate or developmentally appropriate daily activities

Appealing Funding Denials

When a request for funding is denied, Medicaid and all private third-party insurers must have a mechanism for appealing the decision. While time-consuming, appeals are often successful.
  • Review the denial letter, noting the deadline date for any appeal and the reason for denial (beyond the generic "uncovered benefit" statement).
  • Decide if an appeal is appropriate.
  • Double-check that the person, diagnosis, or an alternate diagnosis is covered, and the requested item is not a clearly stated exclusion.
  • The family should phone the person who signed the denial letter. (It may be helpful for the care coordinator or clinician to call if the family is unable to get clarification of issues.)
    • Ask why the funding was denied. If not given a concise answer, or if the answer is not logical, the individual should ask to speak to the supervisor for clarification. If they experience stalling tactics (long hold times, accidental disconnection, etc.), have your office staff get the individual on the line.
    • Ask for specific examples of what would be needed to qualify for funding for the specific service/item (e.g., use a different diagnosis, indicate impact differently, clarify why current/other equipment would not be adequate for the child's need, a different vendor, etc.).
    • Document who was spoken to and what was said.
  • Based on the information gathered, decide if an appeal has a chance at success. If the reason for denial is nebulous, illogical, or keeps changing, an appeal may have a better chance of success.
  • Will the requested testing likely change treatment and, therefore, the outcome? If so, state this in the appeal letter.
  • In addition to the medical home involvement, other key individuals (therapists, home care companies) should also write appeal letters referring specifically to the insurer's contract and definition of medical necessity. Attach to the appeal all initial letters, the denial letter, documentation of phone contacts, and any supporting material (e.g., therapy notes).
  • If the item is denied again:
    • Repeat the above process of information-gathering.
    • The family should decide if they would like to request a hearing on the matter.
    • Identify resources for legal representation, including the state’s equivalent of a disability law center.
    • Note on Double Jeopardy: Families with both private insurance and Medicaid may get caught in the middle because a private payer refuses to fund an item/service and Medicaid, who would normally fund such an item, refuses to pay because they feel the private insurance should have paid (Medicaid is always the payer of last resort). In the appeal letter to Medicaid, the family should state that they would like Medicaid to pay for the service, but Medicaid may continue to pursue funding from the private payer ("pay and chase").
    • The state’s insurance department may also be helpful. See Patient Advocate Foundation (PAF).

Independent Review

When an appeal is denied, an independent review may be allowed by the insurer. Depending on the type of health insurance, the independent review process is administered by the insurer or the state’s Insurance Department. Check the policy, certificate, and plan document—or ask the insurer whether independent review can be requested.

Special Circumstances

Urgently needed care
An expedited review is possible if the determination involves a medical condition that would jeopardize life or health. An additional form may be required, usually from the treating health care provider.
Experimental or investigational treatment
Sometimes the insurer and the medical provider or family will disagree on the definition of experimental or investigational as applied to a requested service, etc. An additional form may be required to support the non-investigational/experimental nature of the request.

Examples of Letters & Requests

Writing Letters of Medical Necessity - General Templates

The following provides a blank form for families to provide the information needed for the clinician to write a letter of medical necessity and a fill-in-the-blank template with the important components of a successful letter of medical necessity.

Resources

Appealing Funding Denials
Steps for how to appeal first and second denials of insurance coverage and request an independent external review; Medical Home Portal.
Services for the Uninsured or Under-Insured
Finding services and health insurance to help with costs of health care; Medical Home Portal.

Patient Advocate Foundation (PAF)
Insurance Commissioners by State, solving insurance and healthcare access problems.

For Parents and Patients

A Request for a Letter of Medical Necessity (Word Document 16 KB)
A simple, one-page form for parents to fill out that helps the physician write a letter of medical necessity.

Authors

Compiler: Information compiled by Medical Home Portal authors and staff
Content Last Updated: 11/2020